Treasury sells remaining AIG shares

The government at one point owned 92% of AIG.

The Treasury Department said Tuesday it had agreed to sell the last of its shares in insurer AIG, resulting in what it says is a $22.7 billion profit on one of the key bailouts of the 2008 financial crisis.

Treasury owns 15.9% of AIG, or 234.2 million shares. The department said it's selling the remaining stock in an underwritten final offering at $32.50 per share, expecting to raise $7.6 billion. Monday's closing price was $33.36.

The offering comes four years after AIG was crippled by the financial crisis, requiring a government bailout, called the Troubled Asset Relief Program, which eventually swelled to $182 billion. The government at one point owned 92% of the firm.

The Treasury Department still holds warrants allowing it to purchase roughly 2.7 million AIG shares that will also be sold in the future.

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In an internal memo to employees, AIG CEO Robert Benmosche said the Treasury sale "marks one of the most extraordinary -- and what many believed to be the most unlikely -- turnarounds in American business history."

"This has been a long walk since September of 2008," Benmosche wrote.

AIG (AIG, Fortune 500) shares rose 4% in midday trading Monday.

Neil Barofsky, who oversaw TARP from 2008-2011 and is now a senior fellow at New York University School of Law, said the sale is "very good for the taxpayer." But he also called it "misleading, in that nearly a third of that stock came from the Federal Reserve, not from purchases made by Treasury through the TARP program."

Related: Too early to call AIG bailout a success

In an email to CNNMoney, Barofsky said the fact that Treasury paid out AIG's creditors at 100 cents on the dollar created a "massive moral hazard" and incentivizes "the exact same types of behavior that led to the last crisis and will almost certainly cause the next."

In September, the Treasury Department sold $20.7 billion worth of AIG shares, reducing its stake in the company from 53.4% to 15.9%. At that time, Treasury said it and the Federal Reserve together had generated a $15 billion profit on the AIG rescue, having recovered $197 billion on a $182 commitment.